“A Snail’s Pace Market”
A housing report from Maine Today. “Workers have begun framing the first home in a new subdivision in Westbrook. It’s a 1,400-square-foot cape with a base price of $204,000, roughly $50,000 below the median home price in Cumberland County. That price point is no accident. The builder had initially planned ‘move-up’ homes, with garages, paved driveways, gas fireplaces and other extras that would sell for $270,000 or so.”
“But as the housing market slowed and potential customers had trouble selling existing homes, the builder redesigned the project to make it more affordable for first-time homebuyers.”
“Cutting amenities is one way southern Maine homebuilders are weathering the national downturn. They’re also offering buyer incentives, writing contracts contingent on the sale of existing homes and lowering prices. Some, like Custom Built Homes of Maine, are staying away from price segments already burdened with too many ‘for sale’ signs.”
“‘We’re trying niches that keep us out of the $350,000 to $400,000 market,’ said Ron Smith, the company’s owner.”
“Builders such as Smith say these adjustments really just reflect a correction, a return to a more-stable construction environment after a few hectic years. But housing-start figures for 60 towns in southern Maine, collected by Construction Data New England, show that the brakes have come on fairly hard.”
“Through the end of October, the number of new building permits dropped 27 percent from the same period last year 1,515 compared with 2,069.”
“Kasprzak Builders of Waterboro develops condominium communities in Wells, Kennebunk, Gorham and Brunswick. The company typically builds 60 units a year and has had to make adjustments to stay on track. Overall prices have been cut about 5 percent this year, according to Bob Georgitis, the company’s VP.”
“Customers typically have homes to sell, and that can be a slow process these days. ‘It wasn’t a problem in the past,’ Georgitis said. ‘But now, people are unwilling to sign contracts until they are near closing.’”
“‘Buyers will remain very price conscious, Smith said, and builders will need to respond. ‘It’s going to be very competitive, no doubt about that,’ he said.”
The Portsmouth Herald from New Hampshire. “The current housing market may give those on the lower income bracket a chance to look at buying their first home. ‘We are in a snail’s pace market,’ Realtor Florence Ruffner joked. ‘Prices have leveled; people can get in now that maybe couldn’t get in six months ago.’”
“‘I think it’s gone back to a more normal market,’ said Ruffner, in Exeter and a 25-year industry veteran. ‘It can now take six to nine months for a property to sell, before it was just wild. That was just a very different kind of market. It’s more like what it used to be before the wave. We rode the wave and now it’s calm.’”
“‘People are taking longer in making decisions … they have the luxury of taking their time,’ she said. ‘Still, people are not giving houses away, and they shouldn’t. People are entitled to fair-market value of their home.’”
“Loan officer Mark Danie thinks the market is switching from a seller’s market to a buyer’s market. ‘It’s a supply-and-demand situation,’ he said. ‘Those out there looking for the $250,000 range have many to select from. They are able to compare and contrast properties. They can be more picky than they were before.’”
The Nashua Telegraph. “Every town in Hillsborough County complains about too much growth, so when the Federal Reserve Bank does an in-depth study of New England migration patterns, what does it find? More people are leaving the county than entering it, the study found.”
“Of all the people who moved into Hillsborough and Rockingham counties in the year 2003, 47 percent were from the Bay State. And southeastern New Hampshire wasn’t the only Massachusetts magnet; the whole state was a draw. ‘Massachusetts had a net out-migration of 47,600. Of those, 18,444 (39 percent) went to New Hampshire,’ said Carrie Conaway, deputy director at the New England Public Policy Center.”
“But unlike the state’s other nine counties that drew Bay State immigrants, Hillsborough saw more people pack up and leave than unpack and arrive in 2003. (The population didn’t decline, however, because of more births than deaths.)”
“‘I don’t think that’s all that surprising, for two reasons,’ said Steve Williams, executive director of the Nashua Regional Planning Commission. One is jobs, he said: 2003 was a down time for the Boston-area tech industry, and ‘Hillsborough County, and especially the Nashua area, tracks Boston very closely in terms of employment.’”
“The other is that old bugaboo, housing prices. ‘At some point people began to realize there are less expensive housing opportunities not too far north, in Merrimack County, or out to the west,’ he said.”
Impressive. I doubt that this HB is the norm, though.
IMO, this would help the prices come down faster, by there being houses out there that aren’t McMansions. These houses might actually appeal to people who want to live in them.
OTOH, McMansions could become dandy homes for people who can’t afford to buy their own. As in, 1960s communes meet the 2000s housing market.
Saratoga Springs New York had mansions built 1900-1915 for the very rich, We used to call it the Great Gatsby era. They were empty in the 70’s sold for $25,000 then. Now, they sell for over a million. Does history repeat itself. I think yes!
Bhahaha…. Saratoga…. Clearly, they only place in all of Saratoga County that could come close to valuations of 1 million would be exactly what you’re speaking of….North Broadway just down the street from Skidmore College and even then, those places might be worth 500k in superb condition. Otherwise, the political machine better known as the County Board of Supervisors run out of the Ballston Spa keep good old county residents slaving to whatever big money interests that happen to line the board of supervisors pockets that year.
Nothing in that place ever changes.
“…It’s a 1,400-square-foot cape with a base price of $204,000, roughly $50,000 below the median home price in Cumberland County. That price point is no accident. The builder had initially planned ‘move-up’ homes, with garages, paved driveways, gas fireplaces and other extras that would sell for $270,000 or so.”
I know some see this as good news, but I don’t see it as the way the market needs to adjust. That is, builders simply scaling back on the size and quality of a home so, “we can get you in something affordable”. Sorry, only one bath, plug-in heaters, a kitchenette with Formica counters and no garage – but hey, you’s a homeowner! I notice builders tout the boom being over and the return to a “normal market”, but apparently we aren’t going to return to normal margins.
This market is on it’s way to correcting when that 270k house is 204k.
I disagree. Some potential first-time home buyers such as myself look at larger houses as much more maintenance and much higher energy bills. I would rather have a larger yard for my kids to play in than some of these McMansions I see around here straining up against property lines–and have you seen some of the windows in these places? Huge windows that look right into your neighbor’s huge windows.
I hope my post didn’t sound like a vote for McMansions in favor of needed sensible housing. What I have a problem with is …..
We are approaching another “marketing wall” for the HB’s. Buyer pool is exhausted, lending cannot get any more creatively fraudulent (I hope), upgrade teasers are exhausted, and prices still hovering around the 2005 peak are out of reach for even the last of the GF’s. What to do, what to do……heaven forbid the HB’s cut into their over inflated margins. No, well just start building little cracker-box homes for those who missed the boom. Buying one of these homes is still buying into the peak.
Sellers have tried every gimmick imaginable to sell you a home without moving on the price, and I see this builder’s “scaled down” housing plan as just a new twist at maintaining their profit goal, not a builder that has come to terms with the state of housing. And if you are looking for a large yard, I doubt the re-worked housing development here will be maintaining the McMansion lots, simply with smaller homes on them. Probably going to look more like military barracks.
I guess “giving their houses away” in the new Age of Entitlement means anything more than 10% lower than the bubble top. These realtors need to learn quickly where their money is going to be made going forward - advocating for buyers, not delusional bagholders.
Oh, and here’s a little treat for the “TX is such a vibrant, great place to invest” crowd. Idiots.
http://dallas.craigslist.org/rfs/240583370.html
Of course I had to find the 11k property see what that was all about. Amazing to think people pay 400k to 1.2 Million for that in SoCal. With less land. It boggles the mind.
I wouldn’t buy anything in Texas (or anywhere in the south) that wasn’t brick - even @ $11K. (termites)
I was gonna say. Reading about all these $250K houses and Gatsby-style mansions selling for “more than a million!” is so…cute. When you’re renting in Southern California and know that a million will buy you a three-bedroom two bath ranch-style nothing on a sliver of land in Encino.
‘Still, people are not giving houses away, and they shouldn’t. People are entitled to fair-market value of their home.’
Ben has a real nose for these quotes, doesn’t he?
Ahh, you all beat me to this quote. I was going to say something like, “she obviously doesn’t know the definition of fair market value.” I know I state the obvious sometimes.
Will I be lambasted for using the word “obvious” twice in one post?
Not you Chad but, it amazes me to read comments in news articles of people who who have such a flair for the obvious. The flair for the obvious makes me nauseous.
“People are entitled to fair-market value of their home.’”
And fair value is what I offer you. Don’t like it ? Then stay where you are and stop whining about “giving your house away”.
Exactly Mo:
I haven’t seen prices shift too much in southern New Hampshire. Even 250k is a lot when the average household income is 55k in NH.
204k is a lot in Maine when the average household income is a little over 39k.
Have to catch a lot of fish for that
Lobstermen often have six-figure incomes, but an awful lot of Mainers have jobs such as cleaning-woman. Not as low-wage as you might think, but definitely seasonal.
True, but they’re not totally steady - make 100K one year then 30K the next. That’s why so many (that I’ve met) live so frugally - especially considering their meager home time.
People are not “entitled” to anything. “Fair-market value” is an oxymoron. The market is not fair or unfair.
Max, I think the fair refers to the fact that the sale price or value isn’t unduly influenced by unusual conditions or excessive pressure, eg the seller must sell within 2 weeks, or is going bankrupt.
This also realtes to whether or not auction sales should be included as comps in an appraisal - do auction sales represent “fair” market value? Ultimately, it depends on the auction and the motivation of the seller.
I’m still convinced that the real problem is that folks CAN’T stay where they are. They either bought that house on an IO/neg-amARM, or refi-d into an IO/neg-am/ARM. Their payments are going to go up, and there are no more refi’s because appreciation has stopped. When the IO runs out and you tack on principle, there’s no saving you even if interest rates go down again.
This, to me, is the fundamental difference between this bubble and every other bubble (except for 1929), and it’s just not being addressed in the media yet — too much nuance for the masses, I guess. All the historical trends are useless, and realtors or Learah-types who rely on history are in for a rude awakening.
Taxes, don’t forget the taxes, man!
From New York:
‘The latest figures from industry monitor McGraw-Hill Construction show the dollar value of new residential construction fell 12 percent in October. The figures come as no surprise: Earlier this fall, the chief economist of the National Association of Realtors said the housing slowdown nationwide was hitting builders particularly hard. The impact in the Capital Region hasn’t been as great as in other parts of the country.
We have the real estate bubble. It’s a fraud! The entire real estate investment in the United States is a fraud! Right where we’re standing, across the river in Loudoun County, it’s ground zero for the biggest financial real estate crash in all human history. It’s going into a chain-reaction collapse, and other parts of the country are not far behind. That’s the situation we’re in. It’s because we have incurred a mass of debt, of financial debt, in the system, based on a gambling system.
You are right about that guest.
Dig it. Made my habitual purchase of additional Australian govt bonds this morning.
“Real estate markets are notoriously local. Maine, with its low population growth, rarely sees the overbuilding and speculation common in, say, Florida or Arizona.”
There’s been some overbuilding in parts of southern Maine, but the builders seemed to have pulled back, keeping inventory within check.
The one place I’ve seen overbuilding is the Sunday River ski area. Here I think there could be some real bargains over the next year.
With the mobility of the US workforce and the now integrated mortgage market… real estate isn’t as local as it used to be. Retirement communities in the sun belt are almost a comodity.
This is going to be national and interesting.
Neil
Labor mobility is going to take a big hit now that so many young homeowers are bubbling under water. Retirees may still be mobile,
but not so much the labor force anymore…
Even with the new CMO-based mortgage market, local factors will remain very important in how this mess plays out. Just wait until the layoffs start - some industries will get hit harder than others, and you will see localized impacts in specific markets.
no, i agree with the supposition that markets are local.
after the local united states market corrects then it will spread to other countries.
local united states market
The smart “migrants” will head for NH if they have any sense of the economic situation in northern NE.
ME had the second worst (Louisiana with it’s hurricanes being at the bottom of the barrel) economic growth factor in the country in ‘05.
On the basis of combined income sales, and real estate, as percentage of income it’s constituents are the highest taxed in the country.
It is ranked No. 1 in level of overall taxation (income, sales, property), while ranking 38th in per capita income.
State government is psychotic in it’s regulation of business, with the overriding presumption is the only reason a business exists is to be taxed to death to provide for legions of state employee parasites and welfare cases.
The recent election returned the same governor and legislature branches responsible for the above.
It’s a total Socialist-redistributionist political culture, with the place locked into an economic death spiral.
The young and productive leave for better economic pastures while the elderly and welfare crowd sit and scream for more entitlements and assistance.
The builder’s with their “frill-less” housing are doin’ nothin’ more than turning the Titantic after it’s hit the iceburg.
Still can’t buy the $200k house makin’ $9.00 and change while employed at the local Wal-Mart.
‘ The builder’s with their ‘frill-less’ housing are doin’ nothin’ more than turning the Titantic after it’s hit the iceburg.’
That’s a good point. Building cheaper houses won’t do anything to move the over-supply in more expensive homes.
Yeah, and who wants a home in Maine w/o a garage, esp. in the winter? On top of that, you could at least pave the driveway for me to build a garage, but NOOOOOOOOO! So I guess that’s the new paradigm, cut prices, but offer less. What a crock! It still will not move inventory or get people to buy banjo box homes, esp. in places like Maine!
Hey, make sure your driveway faces south so it will melt!
Doesn’t that just turn it to mud??
I’d love to buy a place totally barebones - just the shell with super basic fixture etc. My idea heaven is very open and minimalist using sustainable resources (think Dwell prefab homes).
Isn’t the perk of buying you’re own place turning into your version of comfort? Almost every new house I’ve seen lately I’ve hated (can’t stand the tuscan, country, french inspired crap). Give me a shell, priced accordingly and let me go to town.
I just went to see the Rocio Romero prefab homes 10 days ago. Very nice. I’m going to post the photos at some point.
If a enough cheap homes get built, perhaps they will be bought by the Plankton, which could lossen things up higher on the food chain. Also, more cheap homes = more supply = lower prices = affordability at some point
Further to hd74man’s point about Maine taxes:
I went to a Democratic forum a month or so before the election. Nincompoop State assemblyperson Hannah Pingree was yakking about how Maine has to charge high tax rates because it’s one of the poorest states in the nation. I pointed out to her that there are a lot of middle-to-upper class people who own homes in Maine but who make sure their principal residence is somewhere else, lest they be hit by an income tax that reaches eight point something percent as soon as your income is in the low five figures. Gack.
Let’s not forget the NIMBY attitude.
can we have a LNG terminal on the coast? No way! The couple dozen lobstermen that fish that area would have to shift there traps out of the way once a week. The state would collapse if it wasn’t for them!
How about some windmills on the western mountain tops? Gasp! The Appalachian trail hikers would have to see that. There must be a better area.
casinos? Well that would just ruin the character of this great state.
Well what should we do with the 3500 acre Naval Air Station (with two long runways and air towers) that is set to close in 2011? The only logical answer is a large flower garden and waterpark of course! (believe it or not…this is really what the redevelopment committee has come up with.)
Can we put a Hooters in Portland? You’ve got to be kidding. All that smut in our beautiful city.
This BS never ends and it seems no one understands why the taxes are so high. All they want to believe is that it’s from goverment overspending yet nobody want to cut anything and all spending bonds pass easily.
AAARRRRGGGHH!
And to think, I believed that a garage, gas fireplace, and def. a paved driveway came with the house. Sheesh, these builders are greedy. It’s the least they can do since no one provides a backyard or any yard for the matter. Even in Maine, I still wouldn’t pay that much for so little! I know, it’s different here. NO IT ISN’T!
“The young and productive leave for better economic pastures while the elderly and welfare crowd sit and scream for more entitlements and assistance”.
This was recently refuted to large degree by a University of Maine study. An excellent editorial on this appears at http://pressherald.mainetoday.com/viewpoints/editorials/061127braindrain.html
Although there is clearly some “brain drain”, the editorial notes: “Maine is increasingly popular as a place to live — despite a flagging rural economy — for retirees and professionals willing to trade a portion of their income for a better quality of life. This represents a brain gain.
I interviewed for a job in Portland. Problem was the pay was 1/3 of Boston but the housing costs were only 1/2. Maine is a great place, but there is no reason it should be as expensive as it is.
“Maine is a great place, but there is no reason it should be as expensive as it is.”
It’s all a matter of timing. We were eviscerated in the last run up ending in the late 80’s. It was ugly….. rough times for all but you could have had a castle here for a mere pittance after the dust settled. And it will happen again, just as it always does.
My wife interviewed for one in Bar Harbor. But, I couldn’t find a job there doing accounting (or much of anything) and her income would have been less than Omaha, with housing almost twice as much. Go figure.
That’s exactly the problem with Maine and NH. So for a realtor to say buyers are entitled to fair market value is ridiculous. What houses are selling for now is nothing like fair market value given salaries up there.
Wrong. NH is a high-wage state (where the great majority live down near the MA border) and ME a low-wage state. The huge difference between New England states is striking to outsiders.
“Maine is increasingly popular as a place to live — despite a flagging rural economy”
They didn’t mention that it’s already below freezing at least part of the day and will be until the middle of May.
This incorrect perception tends to keep out the undesirables.
My sentiments exactly!
This quote from hd74 should be posted in every business office and also in every government office (city, county, state, fed, etc) and exchange type as appropriate. This is one of the best I have read.
State government is psychotic in it’s regulation of business, with the overriding presumption is the only reason a business exists is to be taxed to death to provide for legions of state employee parasites and welfare cases.
You’re right, lets leave business unregulated. Like, oh say …lending.
look how regs helped the nuke industry
all the parasites have jobs regulating w no new nukes since 1980 ?
I would love to have one of those unpaved driveways in ME. Would make it extra easy to get your vehicle stuck in some hideous (rain and/or snow) storm that is sure to come that direction sooner or later. Would get all of my exercise doing the daily digout of my oversized, overpriced Hummer 2 so I can get to my Walmart greeter job (morning) and TacoBell manager (night) job in order to pay for my POS house.
“It’s more like what it used to be before the wave. We rode the wave and now it’s calm.’”
yeah awesome dude, like the calm before the storm.
Or, like the receding tide before the Tsunami hits shore.
Please ignore the other tsunami post, I’m an idiot. Forgot about that recede.
I was thinking more like the effect of a tsunami wave hitting the coast, but I like yours better - on the ball.
Where do they find all those brilliant people:
“Loan officer Mark Danie thinks the market is switching from a seller’s market to a buyer’s market. ‘It’s a supply-and-demand situation,’ he said.” He sure has his finger on the pulse….
I want to be interviewed by that newspaper. I plan to make a statement like “when it rains, a lot of things get wet”.
Another nominee for Brianiac of the Year.
Honestly, I don’t know whether to laugh or cry at these statements. Let’s see, last week I laughed a lot…think this week I’ll get out the Kleenex
hahaha
now I’m laughing/crying at myself…
“Brianiac” = Brainiac
(no offense intended to any Brians out there)
I’m in my thirties with a young family in Nashua, NH(southern NH). I am seriously considering locating to the south. The cost of homes and the property taxes are ridiculous for the economy it has. NH and ME have some serious issues in the not-to-distant-future. For one thing they are two of the top five oldest states as far as average age. I see it everyday and the vast majority of coworkers are in the 50’s and up. They will need services and will not produce in just a few years. Property taxes go up 5-7 percent a year while much of Nashua’s manufacturing base is long gone. It’s either well paid or low pay, nothing in between. A house is about 250 grand with over 5 grand in yearly taxes. As in the past a home crash is probably emminent. I’m terrified of buying my first home here. I still remember the late 80’s crash. Take out the real state boom and its been a slight recession for several years around here.
Why is it that every Yankee sees the South as the Promised Land? I will let you in on a little secret. It isn’t.
I can agree, it has it’s drawbacks. However I have friends and a brother in the area and I lived there before(atlanta). Also the area is alot more “transplant” than it used to be. I know someone who moved randomely to SC just for better weather and a little more money. He hated the area and moved right back. It’s cheesey to say “Yankee” just as its cheesey for me to joke about banjos and rednecks if I were down there.
Gwynster wrote: I’d love to buy a place totally barebones - just the shell with super basic fixture etc. My idea heaven is very open and minimalist using sustainable resources (think Dwell prefab homes).
Have you seen the new “Katrina cottages” from Lowe’s? $45 - $55 per square foot. They deliver them complete except for HVAC. And they’re designed to grow. I think they are pretty cool.
http://www.cusatocottages.com/index_content.html
FYI US Dollar is still crashing. All your savings will be worth less than toilet paper. At least you can wipe your buttcrack with toilet paper. The dollar will rip you to shreds.